Don this is the older AC-Win that required a proprietary PCI card in the PC. It's a UP0/E connection back to 4K (SLMO) and the handset (and tape recorder) also connects physically to that card. It doesn't use IP for anything, and the headset requires a non-standard connector to connect it directly to the handset cradle. There doesn't have to be a headset, just the handset is common.
Difficult to say what could be wrong. If you had two of them you can change parts to prove them but if you only have one, it's more difficult. Yes a faulty handset could cause this, because the handset must be connected for AC-Win to come in service. But other things could go wrong. This version is not as twitchy with audio devices as AC-Win IP because it doesn't need them - it has an internal ringer on the card and a proprietary handset, so audio device is not a dependency.
Could be a faulty handset, or connector.
Could be a corruption in XP, possibly an update. But I suppose with it being XP, you haven't had any updates.
Could be a faulty AC-Win card in the PC (does it display OK in device manager).
Could be a faulty SLMO port.
Could be faulty line and plant.
Could be 4K config, has anyone made changes to VFGR or ACSU (unlikely).
This version of AC-Win does not use a license file. You could reinstall on a different PC. You need to know if you are using MQ or DQ to reinstall.
There was an inf driver supplied with AC-Win with these UP0/E cards. Could reapply it.
Could add a new ACSU config on 4K on a different SLMO but you'll need to add the new ACSU number into VFGR.
Could move the UP0/E cable pair to new line and plant (maybe test with a known good working Optiset pair? Delete a phone, readd as ACSU, plug the PC in there).
Check console still added in VFGR and ACSU config.
Could give the 4K a soft restart but I doubt that would help. I'd do it anyway because why not.
There is a diags program installed along with AC-Win, "ACDiag", it will write various logs with various debug levels, but the output is cryptic, slows the PC to a crawl if you max the logs our, and may not help. Previous options are probably easier.